he Japanese Yen strengthened by more than 3% in a manic 10 minutes of currency trading late last night after the currency broke through some key technical trading levels, triggering massive stop-loss sales. This automatically unwound a vast amount of short JPY trades, sending the currency soaring and causing investors to move away from those currencies deemed riskier. The initial move was largely fuelled by concerns over the health Chinese economy following some weak data that showed the dominant manufacturing sector of Asia’s largest economy contracted for the first time since May 2017.

Emerging market currencies sold-off across the board, as did most other G10 currencies, with Sterling bearing the brunt of the rout. The Pound had already been on the back foot during London trading yesterday, shedding around one percent of its value amid ongoing Brexit concerns. The flash crash sent the currency another one percent lower late yesterday evening.

Sterling briefly touched its lowest level since April 2017, before recovering the majority of these losses to trade just shy of the 1.26 mark against the US Dollar as markets opened this morning.

Traders eye Eurozone PMIs, US payrolls report

One currency that emerged largely unscathed from the crash was the Euro. Similarly to Sterling, the common currency had, however, already lost over one percent of its value during the London trading session against the broadly stronger US Dollar – a beneficiary of the aforementioned safe-haven flows.

A slew of economic data releases this week following the quiet festive period have the potential to shift the major currencies in the coming days. We will be paying close attention to Friday morning’s Euro-area composite PMI for confirmation that activity in the bloc’s services and manufacturing sectors slowed sharply in December, as the initial estimate suggested.

Then on Friday afternoon we’ll get the US labour report for September, expected to show that job creation picked up the pace in the last month of 2018. Economists are pencilling in another solid job nonfarm payrolls number of 177k. As always, we will be paying close attention to the average earnings number for an indication that low unemployment is feeding its way through to higher wage growth.